Economy & Industry
An improving economy
Zimbabwe’s economy began declining in the 1990s and the situation became serious in the early 2000s. Rampant inflation caused bank notes to lose their value quickly. Today, Zimbabwe operates a multi-currency system, where foreign money such as the US dollar or South African Rand are used for trading.
A popular snackSnacksIn this video...Godfrey and Florence visit a local food factory. They love UNI corn snacks and buy some bags to take home when they leave.
A number of factors led to the decline of the economy, including the aftermath of land reform, Zimbabwe’s involvement in the civil war of the Democratic Republic of Congo and the suspension of international loans and economic aid to the country.
However, over the last few years, the economy has begun to stabilise. The International Monetary Fund expects growth of 7% in 2011, while the government estimates growth could be as high as 9%.
China has offered to inject US$10 billion into Zimbabwe’s economy, with preferential loans for over 500 infrastructure projects and investments in mining and agriculture.
Mining provides jobs for only around 5% of the workforce, but the sector brings in a third of the country’s export earnings. Gold, platinum and other metal alloys are mined, as well as coal which is used to produce electricity.
Under the state’s current ‘indigenisation’ programme, foreign mining companies have been asked to give a 51% stake in their businesses to black Zimbabweans. If the companies decide they are unwilling to do this and pull out of the country, the metal mining sector could contract.
Zimbabwe stands to earn more than 2 billion dollars a year from the Marange diamond fields.
Diamonds are becoming increasingly important to Zimbabwe’s economy. In the past, revenue from diamond mining was restricted. Key mines in the Marange region did not meet international standards set out by the Kimberley Process (for ensuring the sale of stones mined legally). However, these restrictions have been lifted.
The agricultural industry is a key sector for Zimbabwe’s economy. The main exports are tobacco, cotton and sugar.
Tobacco is the most valuable crop; exports of unmanufactured tobacco earned the country over 240 million dollars in revenue in 2009.
However, the farming sector is still recovering from changes brought about by land reform, when farms were taken out of the hands of white owners. An estimated 350,000 full-time agricultural workers and 270,000 seasonal ones (with around 1.5 million dependants between them) lost jobs.
Some of these black agricultural labourers were given land. But since many workers were originally from neighbouring countries (e.g. Malawi, Zambia and Mozambique), it is estimated that fewer than 2% received land under the state redistribution scheme.